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What's in the Cards for Perrigo (PRGO) This Earnings Season?

Zacks Equity Research

Perrigo Company plc PRGO is scheduled to report third-quarter 2019 results before market open on Nov 6.

The company’s earnings beat the Zacks Consensus Estimate in three of the last four reported quarters and missed the same once with the average positive surprise being 5.7%.

Shares of the company have gained 36.9% so far this year compared with the industry’s increase of 12.1%.

 

In the last reported quarter, Perrigo delivered a positive earnings surprise of 6.17%

Factors Likely to Influence Results

Perrigo has reconfigured its marketed portfolio and accelerated its innovation pipeline.

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Perrigo’s sales at the Consumer Self Care Americas segment were boosted by the company’s initiative to switch prescription drugs to over-the-counter brands. Moreover, the new products in the Consumer Self Care Americas and Consumer Self Care International segments saw improved sales in the past couple of quarters – a trend that most likely continued in the third quarter. However, loss of sales from discontinued products and exited business, and a strong dollar might have offset the gain from new products.

The completion of acquisition of privately-held Ranir Global Holdings, the global leader in private label oral self-care products, in the third quarter might have boosted Perrigo’s third-quarter top and bottom lines.

Although Perrigo is looking to spin-off its Rx business, higher sales of new products in the Rx segment and continued moderation of pricing pressure in the generics industry are likely to have driven segment sales.

The bottom line is expected to reflect ongoing restructuring initiatives and operating expense discipline.

Key Developments

In July, Perrigo completed divestment of its Animal Health business for $185 million in cash to pet medication and wellness company, PetIQ PETQ. The company entered into an agreement with GlaxoSmithKline GSK to acquire branded OTC rights to heartburn relief drug, Prevacid 24HR. These developments are part of the company’s process to transform itself from a healthcare to consumer self-care company initiated during the first quarter of 2019.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Perrigo in this reporting cycle. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (96 cents) and the Zacks Consensus Estimate (93 cents) is +2.47%.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Perrigo currently carries a Zacks Rank #4 (Sell).

Perrigo Company plc Price and Consensus

Perrigo Company plc Price and Consensus
Perrigo Company plc Price and Consensus

Perrigo Company plc price-consensus-chart | Perrigo Company plc Quote

A Stock That Warrants a Look

Here is a biotech stock that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release.

Amarin Corporation PLC AMRN has an Earnings ESP of +100% and a Zacks Rank #3. The company is scheduled to release third-quarter results on Nov 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.5% per year. So be sure to give these hand-picked 7 your immediate attention.

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GlaxoSmithKline plc (GSK) : Free Stock Analysis Report
 
Perrigo Company plc (PRGO) : Free Stock Analysis Report
 
Amarin Corporation PLC (AMRN) : Free Stock Analysis Report
 
PetIQ, Inc. (PETQ) : Free Stock Analysis Report
 
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Zacks Investment Research